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Should You Buy Willdan Group, Inc. (WLDN)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Willdan Group, Inc. (NASDAQ:WLDN).

Willdan Group, Inc. (NASDAQ:WLDN) shareholders have witnessed an increase in support from the world’s most elite money managers lately. WLDN was in 6 hedge funds’ portfolios at the end of March. There were 3 hedge funds in our database with WLDN holdings at the end of the previous quarter. Our calculations also showed that WLDN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Marshall Marshall Wace

Paul Marshall of Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the latest hedge fund action regarding Willdan Group, Inc. (NASDAQ:WLDN).

Hedge fund activity in Willdan Group, Inc. (NASDAQ:WLDN)

At Q1’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WLDN over the last 18 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Arosa Capital Management, managed by Till Bechtolsheimer, holds the biggest position in Willdan Group, Inc. (NASDAQ:WLDN). Arosa Capital Management has a $6 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Value Holdings LP, led by Tim Curro, holding a $1 million position; 0.5% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism encompass Israel Englander’s Millennium Management, Paul Marshall and Ian Wace’s Marshall Wace LLP and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Arosa Capital Management allocated the biggest weight to Willdan Group, Inc. (NASDAQ:WLDN), around 0.72% of its 13F portfolio. Value Holdings LP is also relatively very bullish on the stock, dishing out 0.47 percent of its 13F equity portfolio to WLDN.

As one would reasonably expect, key hedge funds have jumped into Willdan Group, Inc. (NASDAQ:WLDN) headfirst. Arosa Capital Management, managed by Till Bechtolsheimer, established the most valuable position in Willdan Group, Inc. (NASDAQ:WLDN). Arosa Capital Management had $6 million invested in the company at the end of the quarter. Tim Curro’s Value Holdings LP also made a $1 million investment in the stock during the quarter. The other funds with brand new WLDN positions are Israel Englander’s Millennium Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s also examine hedge fund activity in other stocks similar to Willdan Group, Inc. (NASDAQ:WLDN). These stocks are Landcadia Holdings II, Inc. (NASDAQ:LCAHU), Sohu.com Limited (NASDAQ:SOHU), Albireo Pharma, Inc. (NASDAQ:ALBO), and Hoegh LNG Partners LP (NYSE:HMLP). All of these stocks’ market caps are similar to WLDN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LCAHU 17 108456 0
SOHU 10 42493 -1
ALBO 10 55546 -2
HMLP 6 15718 1
Average 10.75 55553 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $8 million in WLDN’s case. Landcadia Holdings II, Inc. (NASDAQ:LCAHU) is the most popular stock in this table. On the other hand Hoegh LNG Partners LP (NYSE:HMLP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Willdan Group, Inc. (NASDAQ:WLDN) is even less popular than HMLP. Hedge funds dodged a bullet by taking a bearish stance towards WLDN. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately WLDN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); WLDN investors were disappointed as the stock returned 21.7% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.